DRC Bans Copper and Cobalt Exports - What Do We Need to Know?
DRC Bans Copper and Cobalt Exports - What Do We Need to Know?
Natalie Scott-Gray
- Base Metals
Weekly Base Metal Macro Economic Slides
By: Natalie Scott-Gray, Senior Metals Demand Analyst, EMEA and Asia region
Weekly Base Metal Macro Economic Slides
Key Takeaways:
Market Overview & Price Drivers
- Highlighted the dominance of the upcoming Fed meeting and expectations for a 25-basis point rate cut, noting its significance as the first cut since Trump’s return to power. Emphasized the bullish impact of a weakening US dollar and positive developments between US & China over Tiktok deal, as well as increased US investment in mining, offsetting weak China data and European automotive industry challenges due to export delays of rare earth.
- Mentioned Mexico’s plan to raise tariffs on Chinese and Asian autos, and ongoing developments in Russia.
- Noted the US Bureau of Industry and Security’s process to include more steel and aluminium derivatives under tariffs, with a focus on potential implications for aluminium scrap.
Metals Market Analysis
- Copper: Prices seen as too high for fundamentals, driven by macro factors and the US dollar. Chinese demand is weak, with peak season demand not materializing. Supply-side concerns include the Grasberg mine suspension, although this is set against positive supply news on the potential increase in output from Panama and Anglo Tech, but these are longer-term factors.
- Aluminium: Mixed global picture; LME prices supported by stocks, while China’s upward momentum depends on stock drawdowns. Modest increase in Chinese operating rates, but further observation needed to confirm a de-stocking inflection point.
- Zinc: European supply tightness and Asian LME warehouse de-stocking support prices, but China has plentiful inventory, rising production, and weak construction demand, leading to a bearish outlook.
- Lead: Some LME de-stocking, but limited price boost. In China, maintenance season and expected restocking for National Day may support prices.
- Nickel: Slight recovery in Chinese downstream demand, but below expectations for September. Indonesian government crackdown on illegal mining expected to support prices in coming weeks.
Macro Themes & Policy Developments
- Detailed expectations for the Fed meeting, with the market pricing in three rate cuts for the year, but the Fed likely to maintain a more hawkish tone. Emphasized the importance of the dot plot for 2026 and the positive implications of a 1000basis point cut for metals.
- Discussed improving US-China relations, including the TikTok ownership framework and the potential for further trade talks, as well as the US holding off on tariffs related to Chinese purchases of Russian oil unless Europe acts.
- Outlined the US International Development Financial Corp’s talks to set up a $5 billion mining fund, expected to be a key part of Trump’s policy, aiming to boost US mining and limit China’s raw material influence.
- Noted recent mining sector announcements, including the potential Anglo Tech formation and a $5 billion deal to boost Chilean copper output.
China Economic Outlook
- Reported a second month of weakening Chinese data, with underperformance in industrial production, retail sales, fixed asset investment and exports. Highlighted deepening declines in property investment and sales and weakening impact of government subsidies.
- Stressed ongoing risks in China, including anti-involution policies to limit overcapacity.
- In the months ahead expect increases in government subsidies, continued fiscal support, and possible interest rate cuts, though expectations for monetary stimulus have been pared back due to a stock market rally.
- Summarized August’s weak trade data, PMI figures, and ongoing recessionary risks, with weak loan demand and continued contraction in domestic and external orders.
Policy Announcements & Outlook
- Anticipated more attention on China’s 15th five-year plan, with recent announcements aiming to achieve annual economic and social goals and address automotive industry issues. Highlighted the upcoming Central Economic Work Conference as a key event for further policy direction.
- Base Metals
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